Register’s Family Considers Its Options

Squabbling members of the family that owns Freedom Communications Inc. met Saturday to consider selling or restructuring the closely held company that operates the Orange County Register and other media properties.

During a daylong session at a Costa Mesa hotel that will continue today, about 50 adult descendants of Freedom founder R.C. Hoiles reviewed a dozen options that would allow unhappy shareholders to liquidate some or all of their holdings.

The options include selling all or part of the company, taking the company public, buying out disaffected shareholders and offering a stock repurchase plan. The family intends to present a short list of options to the company’s board Monday night for a vote.

The weekend meeting was organized after dissident family members, including the founder’s grandson and company board member Tim Hoiles, complained about their inability to cash out their holdings.

Hoiles owns 8.6% of the company and contends that mismanagement has diluted his investment.

He is urging that the company be sold and has threatened to sue family members.

Emerging from a hotel conference room Saturday evening, Hoiles said he considered the meeting “a sham” and that he planned to review his options, including whether to proceed with a lawsuit, after the meeting ends today.

Another family member and shareholder, Pamela Hoiles, said she considered the meeting constructive, “but there’s still a lot of hurt.” She declined to say whether she supports Tim Hoiles’ position or some other option.

Freedom owns 28 daily newspapers, 37 weeklies and eight television stations.

The Register, the 12th-largest paper in the country by circulation and the standard-bearer of libertarianism, is considered the crown jewel.

Tim Hoiles has hired a team of high-profile legal and media advisors, including San Francisco antitrust attorney Joseph M. Alioto, to help drum up support for a sale of the company, which he believes would provide the largest payout.

Hoiles maintains that Freedom could fetch $2.2 billion to $2.7 billion, far more than any other option would yield. Independent analysts have pegged the company’s value at $1.5 billion to $2 billion.

On Saturday, London-based investment banker Christopher Shaw, also hired by Hoiles, told reporters assembled outside the closed meeting room that 24 media companies have expressed interest in Freedom.

He declined to identify the potential suitors.

But a source close to the family said Gannett Co., the McLean, Va.-based parent of USA Today and other media holdings, is one, as is Sacramento-based McClatchy Co., owner of the Sacramento Bee and Star Tribune in Minneapolis.

Neither Gannett nor McClatchy officials could be reached for comment Saturday.

Freedom had revenue of $760 million last year and lost about $94 million amid the nationwide advertising downturn and softening economy, said sources familiar with the results.

The business also reportedly wrote off $103 million in magazine, Internet and other losses.